Customs, Excise and Gold Tribunal - Delhi
Air Control And Chemical Engg. Co. Ltd. vs Collector Of C. Excise on 13 December, 1991
Equivalent citations: 1993(66)ELT663(TRI-DEL)
ORDER
Harish Chander, Vice President
1. Air Control & Chemical Engineering Co. Ltd., Barejadi, District Ahmedabad has filed an appeal being aggrieved from the order passed by the Collector of Central Excise, Ahmedabad. The said appeal was presented in the Registry on 15th January, 1990. Thereafter, a stay application duly supported with an affidavit was presented on 10th October, 1991. Shri Kapil Sibal, Senior Advocate with Shri K.S. Nanavati and Yashwant Adiyal, Advocates have appeared on behalf of the applicant. The matter had come up for hearing on 24th October, 1991. Shri K.S. Nanavati, the learned advocate had argued on behalf of the applicant and he had reiterated the facts and contentions made in the stay application. Shri Nanavati had argued that the show cause notice was issued on 17th November, 1987 and it pertains to the period 1st November, 1982 to 31st March, 1986 and the applicant had challenged the show cause notice issued by the revenue authorities before the Hon'ble Gujarat High Court and was admitted vide writ petition No. 1758 of 1988 and notice was given to the other side on 13th April, 1988 and on 22nd September, 1988 after hearing the counsel for the parties, the High Court had passed an order and had granted the stay, but it was further ordered that the proceedings for adjudication shall continue and thereafter the adjudication order was passed by the Collector on 17th October, 1989 and on 21st February, 1990 an amended petition was filed which came up for hearing and on 21st February, 1990 the High Court had granted stay with certain conditions and the applicant had duly fulfilled the conditions as ordered by the Hon'ble High Court and on 10th September, 1991 when it was brought to the notice of the Hon'ble High Court that an appeal is pending before the Tribunal, the Hon'ble High Court disposed of the writ petition and stayed the recovery of the demand till 30th October, 1991 and had further given a direction for the disposal of the appeal by the Tribunal preferably within four months and also a stay application was to be filed before the Tribunal and in view of the directions of the Hon'ble Gujarat High Court, the appellant has filed the present stay application.
2. Today when the matter was again called, Shri Kapil Sibal, the learned Senior Advocate who has appeared on behalf of the applicant, again reiterated the facts. He pleaded that the applicant is a regular central excise licensee and had been filing price lists regularly. The same had been duly approved and the main allegation of the revenue is undervaluation of the compressors and overvaluation of the accessories which were exempt from excise duty in terms of a central excise exemption notification. Shri Sibal, the learned Senior Advocate, pleaded that the present pattern of the applicant's sales was well within the knowledge of the department and earlier this issue had come up before the revenue authorities in 1976 and a show cause notice was issued on 30th July, 1976 and the same was decided vide order dated 26th March, 1983. Shri Sibal, the learned Senior Advocate pleaded that though there are no changed circumstances from the past, the facts and circumstances are the same. The revenue authorities have invoked the extended period of limitation and by no stretch of imagination, the same can be invoked. He drew the attention of the Bench to the High Court's order dated 21st February, 1990 which appears on pages 16 to 18 of the paper book where the Hon'ble High Court had granted stay on the condition of the applicant's furnishing security of immovable property to the satisfaction of the Assistant Collector and also on the condition if the applicant loses in the said petition, then they will pay the amount payable under the order of the Collector within one month from the date of dismissal of their petition and with 12% interest thereon. Shri Sibal pleaded that in case the applicants are desired to deposit the duty amount of Rs. 1,55,22,150.60 and penalty of Rs. 40,00,000.00, it will amount to undue hardship. He further pleaded that there are accumulated losses to the tune of Rs. 3.21 crores arid the applicants have filed an application before the Board of Industrial and Financial Reconstruction (BIFR). He fairly stated the application has not been registered. Shri Sibal filed an affidavit of Shri K.T. Kerala Verma, Managing Director of the applicant company where the financial position of the applicants has been stated and a copy of the same has also been given to the learned Departmental Representative. Shri Sibal fairly stated for the year ending 31st March, 1991 there is a profit for the first time to the tune of Rs. 32,58,000 and in case the applicants are desired to pay the duty and penalty amounts, it will amount to undue hardship. He pleaded for dispensing with the predeposit of the same and grant of stay. Shri Prabhat Kumar, the learned JDR who has appeared on behalf of the respondent, stated that the facts of the present case are very different and the detailed facts have not been brought to the Notice of the Bench by the learned Senior Advocate. He stated that there is suppression of facts on the part of the applicants. They had been under-valuing these compressors by five times below the cost. He drew the attention of the Bench to internal page 4 of the impugned order and he also referred to the show cause notice which appears from pages 41 to 59 of the paper book. Shri Prabhat Kumar, the learned JDR pleaded that inter-office memo and price lists were issued to the customers where it was mentioned that the accessories were to be sold compulsorily along with the compressors. He relied on the order-in-original. Shri Prabhat Kumar, the learned JDR pleaded that the mere fact that the price lists were approved by the revenue authorities cannot absolve the applicants from suppression, in the light of the fact that at that stage additional information was not necessary to be called for. In support of his argument, he relied on the following decisions :-
(i) 1985 (21) E.L.T. 38 - Hindustan Safety Glass Works Ltd. v. Assistant Collector of Central Excise, Allahabad
(ii) 1989 (40) E.L.T. 488 (Tri.) - Collector of Central Excise, Bangalore v. United Glass, Bangalore
(iii) 1989 (39) E.L.T. 641 (Tribunal) - Window Glass Ltd. v. Collector of Central Excise, Calcutta He also drew the attention of the Bench to the provisions of Section 4 of the Central Excises and Salt Act, 1944. He pleaded that the appellants had adopted a device to evade excise duty. He also cited the following decisions :-
(i) 1987 (29) E.L.T. 259 (Tribunal) - Collector of Central Excise, Indore v. Central India Board Products
(ii) 1987 (28) E.L.T. 566 - Pressure Cookers and Appliances Ltd. v. Collector of Central Excise, Chandigarh On limitation, Shri Prabhat Kumar, the learned JDR relied on the following decision :-
(i) 1984 (18) E.L.T. 76 (Tribunal) - Lustre Lampions, Madras v. Collector of Central Excise, Madras Lastly, he cited a decision in the case of Lakshmi Engineering Works v. Collector of Central Excise reported in 1989 (44) E.L.T. 353 (Tribunal). He relied on Para No. 6 of the said judgment which is reproduced below :
"6. The concept of suppression amounts to that which one is legally to state but one intentionally or deliberately or consciously does not state. In other words, the term 'suppression' includes a mental element to deliberately omit to state certain facts which would have a definite bearing in respect of leviability to duty. An intent to evade payment of duty would also come within the purview of suppression. A person who suppresses certain facts by not filing a classification list or maintaining Central Excise records etc. would be guilty of suppression because he wants to evade payment of duty. On the facts of the present case, we notice that on one breath the Board has held that there was a suppression and on the same time opined that there was no conclusive proof of mala fides on the part of the appellants. It is also stated that the circumstances did not establish mala fides on the part of the appellants with intent to evade duty. A close scrutiny of this finding indicates that the Board was not satisfied that there was a deliberate or conscious omission by the appellants. When such a conclusion has been reached the reasonable inference would be that there could be no suppression calling for the invocation of the longer period of limitation. In this case it is proved that the appellants have not filed any classification list or other documents but it is noticed from the order of the Board that a letter had been written by the appellants even on 24-12-1979 which ruled out the possibility of any intent to evade duty. The penalty imposed against the appellant has been set aside on the ground of lack of evidence that it was with the intent to evade duty. With these findings, we are unable to support the earlier conclusion of the Board that there was a deliberate suppression of the facts. Since the two findings appear to be contradictory, we hold that the question of suppression does not arise on the present facts."
On the financial position of the applicants he pleaded that now it is a profit running unit and as such there is no justification for grant of stay. He pleaded for the rejection of the stay application.
3. Shri Kapil Sibal, the learned Senior Advocate in reply pleaded that the applicants had been filing statutory returns as to the filing of the price lists and classification lists. He relied on a decision of the Supreme Court in the case of Tata Iron and Steel Co. Ltd. v. Union of India and Ors. reported in 1988 (35) E.L.T. 605 (S.C.). Shri Sibal pleaded that interim stay orders passed by the Hon'ble High Court are no doubt not binding but are good guidelines. Shri Sibal pleaded for the grant of stay.
4. We have heard both the sides and have gone through the facts and circumstances of the case. The applicants being not satisfied with the order had challenged the show cause notice before the Hon'ble Gujarat High Court and at internal page 3 of the order dated 21st September, 1990 the Hon'ble High Court had observed as under :-
"Having considered the facts of this case, the judgment of the Supreme Court in the case of Bombay Tyres International Ltd. and Section 4 itself, we are of the view that this is a fit case in which interim relief deserves to be granted. As the learned advocate of the respondents vehemently opposed granting of interim relief and argued for quite some time, we are required to give reasons.
We grant interim relief in terms of para 29(B) on the condition that the petitioners furnish security of immovable property to the satisfaction of respondent No. 3 and also on the condition that if the petitioners lose in this petition, then they will pay the amount payable under the order of the Collector within one month from the date of dismissal of this petition and with 12% interest thereon."
Thereafter, the Hon'ble High Court vide order dated 10th September, 1991 had ordered as under :-
"Against the impugned order passed by the Collector, Central Excise and Customs, Ahmedabad on 17-10-1989, the petitioners have preferred appeal before the CEGAT. In this view of the matter this petition would not survive and Ld. Advocate for the petitioners seek leave to withdraw this petition. Permission granted. Interim order granted by this Court shall continue up to 30-10-1990. During that time it would be open to the petitioners to move the Tribunal for expeditious hearing of stay application as well as appeal. The Tribunal is directed to dispose of the appeal preferably within a period of four months from today.
Rule discharged with an (Should be 'no' - Ed.)(sic) order as to costs."
We have considered the prima facie merits of the case. It is not disputed that the applicants had been filing the classification lists as well as price lists from time to time and these were duly approved. It is also not disputed that a show cause notice on similar facts and circumstances was issued on 30th July, 1976 and the same was dropped vide order dated 26th March, 1983 and the revenue authorities' letter dated 29th November, 1976 which appears on page 131 of the paper book. A simple perusal of the same clearly shows that the pricing pattern of the applicants was well within the knowledge of the department. Today we are hearing only the stay application. The matter is sub-judice. Further observations on merits as well as limitation will not be proper. Hon'ble Delhi High Court in the case of Uptron Powertronics v. Collector of Central Excise, Meerut reported in 1987 (28) E.L.T. 61 had observed that in disposing of stay applications the prima fade merits of the case have to be looked into. We have gone through the financial position of the applicants and have perused the balance-sheet for the year ending 31st March, 1991. The profit and loss account appears on page 80 of the paper book (page 9 of the balance-sheet). There is a nett profit of Rs. 32,58,000.00. The applicants have debited depreciation to the tune of Rs. 14,85,000.00. After adding back the depreciation the nett profit works out to Rs. 47,43,000.00 (Rs. 32,58,000.00 + Rs. 14,85,000.00 = Rs. 47,43,000.00). On page 8 of the balance-sheet there are accumulated losses to the tune of Rs. 3,21,86,000.00. During the course of arguments we had enquired from Shri Sibal, the learned Senior Advocate as to how much excise duty the applicants pay annually. Shri Sibal stated that the applicants last year had paid excise duty to the tune of Rs. 1,33,47,000.00. We are also told that the applicants have filed an application under the BIFR, but the same has not been disposed of. We have considered the arguments of the learned JDR as well as of the learned Senior Advocate. Hon'ble Supreme Court in the case of Tata Iron and Steel Co. Ltd., v. Union of India and Ors. reported in 1988 (35) E.L.T. 605 (S.C.) had held as under :-
"Right from 1962 the appellant was filing classification lists containing the description of the items and showing them liable to the payment of excise duty only under Item 26AA(ia) and these lists were accepted and approved by the excise authorities, it cannot be said that appellant was guilty of any suppression or mis-statement of facts, fraud, collusion or contravention of provisions of Excise Act. In view of this the period of limitation would clearly be only six months and the extended period of five years is inapplicable."
It is also not disputed that the classification lists and price lists had been approved from time to time. We have earlier considered the liquidity position at length. Hon'ble Supreme Court in the case of Spencer and Co. Ltd., Madras v. Collector of Central Excise in Application No. 332/84 in Appeal No. 693/84 which was followed by the Tribunal in the case of Sonodyne Television Company v. Collector of Central Excise, Calcutta reported in 1985 (22) E.L.T. 582 (Tribunal) had observed as under :-
"We are in agreement with the contention of the counsel for the petitioner that the expression 'undue hardship' occurring in the proviso to Section 35F of the Central Excises and Salt Act, 1944, would include consideration, inter alia, of the aspect of liquidity possessed by the assessee. We are not inclined to take the view that the impugned order gives any indication that aspect has been completely ignored as was contended by counsel. With these observations the special leave petition is dismissed."
5. Keeping in view the totality of the facts and circumstances of the case, we are of the view that if the applicants are desired to deposit the duty amount of Rs. 1,55,22,150.60 and penalty of Rs. 40,00,000.00, it will amount to undue hardship. We dispense with the predeposit of the same on the condition that the applicants shall continue the security of immovable property already furnished by them. We are told that the earlier offer has been accepted by the department. During the course of arguments, Shri Kapil Sibal, the learned Senior Advocate had offered that in the event of the applicants' losing the appeal, the applicants are prepared to pay interest at the rate of 12% as already ordered by the High Court on 21st February 1990. Shri Prabhat Kumar, the learned JDR stated that there is no provision as to the charging or demand of interest under the Central Excises and Salt Act, 1944. This Tribunal has got no power to order the payment of the interest by the applicants. Hon'ble Supreme Court in the case of Miles India Limited v. The Assistant Collector of Customs reported in 1987 (30) E.L.T. 641 (S.C.) had held that this Tribunal is a creation of a statute and an assessee is bound within four corners of the statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. This view was again reaffirmed by the Hon'ble Supreme Court in the case of Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills reported in 1988 (37) E.L.T. 478 (S.C.). Hon'ble Supreme Court in the case of Income Tax Officer, Cannanore v. M.K. Mohammed Kunhi reported in AIR 1969 S.C. 430 had observed as under :-
"8. Section 255(5) of the Act does empower the Appellate Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision. In our opinion the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when Section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It could well be said that when Section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory."
This Tribunal in the case of Orient Enterprises v. Collector of Customs reported in 1989 (41) E.L.T. 279 (Tribunal) had made an observation that the Tribunal has got no power to order the payment of the interest. The relevant extract from the said judgment is reproduced below :-
"It is well settled that interest is not to be permitted merely because the amount due has been withheld without just cause unless there is a provision in a statute or custom or agreement to sanction the grant of the same. In the instant case there is no provision under the Customs Act for the grant of interest on the delayed payment of the refund. Therefore, the appellant's prayer for the grant of interest is not acceptable. As such, there is no justification for invoking the inherent powers of the Tribunal for paying interest nor any justification for the grant of costs."
In the matter before us, there is an offer from the learned Senior Advocate who has appeared on behalf of the applicant for payment of interest at the rate of 12% in the event of their losing the appeal. While exercising our inherent powers in view of the decision of the Hon'ble Supreme Court in the case of Income Tax Officer, Cannanore v. M.K. Mohammed Kunhi reported in AIR 1969 S.C. 430, we accept the offer of the learned Senior Advocate as to the payment of interest at the rate of 12% in the event of their losing the appeal.
6. In the result, the stay application is allowed and disposed of accordingly.
7. Hon'ble Gujarat High Court had expressed the view for the disposal of the appeal preferably within a period of four months from the date of the order i.e. 10th September, 1991. In the interest of justice, we order that the matter to be heard on merits on 6th February, 1992. It is further ordered that the matter be placed on the top of the list and no outstation matters should be listed. In any case, no adjournment will be granted to any side.